Stock market

Second income for life! 3 FTSE stocks I hope I never have to sell

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While I own some growth stocks, most of the companies in my Self-Invested Personal Pension (SIPP) are designed to generate a second income when I retire. I bought them all with a long-term view, hoping that I would never have to sell. Especially these three.

The UK financial sector is a major source of dirt-cheap, high-yielding income stocks. FTSE 250Listed retirement planning advisors Groups onlys (LSE: JUST) A hidden gem with huge potential, in my view.

My shares forever

I added it to my SIPP on 13 November, and the share price has risen 24.56% since then. This was boosted by 2023 results published on March 8, which showed a 47% jump in underlying operating profit to £377m. During the 12 months, the share price has increased by 17.33%.

Just incredibly cheap, trading at just 3.07 times earnings. At 2.33%, the dividend is lower than what I can get from a competitor. Legal and General Group. But don’t worry, I keep it for variety too. I am hoping that the bus will provide further development potential.

Profits have been boosted by annual sales, which I fear may fall after interest rates drop. I am also worried about today’s low valuations for UK finance. Investors don’t like them. I’m hoping for a reclassification but I’ll have to be patient.

I bought the paper and packaging group. The Smurfit Kappa Group (LSE: SKG) last June, shortly before its shares fell after markets decided it had overpaid to acquire a US-based rival. West Rock. I responded by buying more Smurfit stock at a lower price. Even if the board paid more than the odds, I thought it was worth the risk to expand our operations in the state.

In total, I’m up 15.95% on my two purchases. Over the year, Smurfit shares have gained 18.63%. The stock is forecast to yield 3.87 percent this year, rising to 4.25 percent next year. I hope my income will continue to grow over time.

There are risks. Smurfit has to work hard to comply with environmental requirements on packaging. Maybe today’s delivery culture will die out, who knows? But I still think this is one for the long term.

I bought a house builder. Taylor Wempe (LSE: TW) on three occasions last year. I decided it was too cheap to ignore, trading at about six times earnings, while the 7%-plus yield was irresistible.

No plans to sell.

Shares opened strongly, rising 20 percent in short order. It has been struggling lately, as interest rates seem unlikely to hold up much longer. The share price has increased by just 2.89% over the year. Over five years, it is down 27.29 percent.

Taylor Wimpey might be a value trap, but I don’t think so. Given the housing shortage in the UK, I’m expecting prices to rise when interest rates finally start to fall. Taylor Wempe forecasts a 7% gain this year, which should bolster my other income plans, but I’ll admit I’m bummed to see the core shrink to just 0.9.

Does not matter. I want exposure with home builders and this is my choice. I plan to hold the current property cycle, the next one and the one after that. Building a second income takes time but I think UK dividend stocks are the best way to do it.


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